America’s iconic diner is calling on all entrepreneurs.
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Denny’s announced plans this week to franchise more than 100 company-operated units in the next 18 months in hopes of becoming an almost entirely franchisee-owned brand.
Wall Street ate up the news. The stock has now gained 31 percent this year.
The move comes amid stagnant sales for the family-dining chain, whose same-store sales only grew 1 percent year over year, according to the company’s third-quarter results.
During a call with analysts, Denny’s CEO John Miller said the company’s goal is to be 95 to 97 percent owned by franchisees. Currently, the chain is at 90 percent.
"We look forward to providing an opportunity for development-focused franchisees to expand their businesses while also attracting and welcoming new, well-capitalized franchisees into the Denny's family," Miller said during the company's third-quarter earnings call on Tuesday.
"Our refranchising and development strategy will enable us to further evolve as a franchisor of choice that provides more focused support services, all while yielding a higher quality, more asset-light business model."
News of the move sent shares of the Spartanburg, South Carolina-based company skyrocketing on Wednesday, up more than 25 percent, hitting a 52-week high of $18.16. On Thursday, shares maintained their gains with the stock up more than 35 percent for the year.
The chain also said sales via its Denny’s On Demand app and website now make up about 10 percent of all transactions at its franchised restaurants with about 70 percent of its units currently offering delivery.
Miller said he anticipates continued long-term growth in that area as more restaurants expand their delivery channels.